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Mikko Dahlbom's  Instablog

Mikko Dahlbom
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M.Sc., active investor, tri-athlete and an unconventional thinker.
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  • Why 3D Printer Companies Are Strong Buys?

    First of all, 3D printing is absolutely the future tech that will
    revolutionize manufacturing and consumer possibilities in the near
    future. Secondly, the industry is growing at a rapid pace so the
    companies in it offer great profits even in a short time. Thirdly, the
    industry is receiving increasing attention from press regarding the
    benefits of 3D printing, thus increasing the popularity and stock
    price of the 3D printing companies.

    Since the release the first iPhone in June 2007 Apple ($AAPL) stock
    has gone up 265%. I bet most of us would have invested in Apple if we
    had known the outcome. The iPhone and 3D printing have similarities
    in how they effect the lives of their users. The iPhone was easy and
    fast to use compared to the feature phones on the market at that time.
    It presented novel ways to use novel technologies in consumer
    electronics. So what if you could print the next iPhone with your own
    printer at home? It is easy, fast and comfortable. The human nature
    prefers all of the previous attributes.
    This is a bit far stretched example due to the complexity of the
    product, but who says dreams cannot be nice. However, the simpler
    objects are already at our reach. The printers are already able to
    print practically anything from simple plastics objects to high
    accuracy titanium prosthesis's, depending on the printers of course.

    So why to buy stocks now and not wait until the companies are truly
    profitable? A simple answer is that now you can afford the prices.
    There is no doubt about if the consumers start printing stuff at their
    homes. The only question is when. At the time when you know the answer
    it may already be too late to invest. By absorbing some risk and
    investing now may produce ~200%-600% profits even in a year. Great
    examples are three 3D printing companies: 3D systems ($DDD 2012 growth ~+260%) Stratasys ($SSYS ~+163%) and Arcam ($AMAVF.OB / $ARCM ~+159%). The industry is clearly booming so the challenging issue is to choose the most promising company.

    3D Systems ($DDD) has acquired several companies lately and is
    expanding rapidly. DDD is currently in a great position to become the
    next huge thing. It's operations will cover each area of 3D printing
    from design to manufacturing. The P/E for DDD is ~87, the stock price
    is ~$58.39

    Stratasys ($SSYS) is a versatile company with customers from several
    industries. The P/E for $SSYS is ~96.5, the stock price is ~$81.92.

    Arcam AB ($AMAVF.OB / $ARCM) provides a technology to produce fully
    metal parts e.g. from titanium to customers from medical industry and
    aerospace industry. The P/E for $ARCM is ~53, the stock price
    is($AMAVF.OB ~$26.05 / $ARCM ~174 SEK ($26.1) )

    The P/E ratio alone is hardly a reason to buy but its a start. Do the
    math, study the companies and make the correct decision. The P/E
    ratios are already in the nose-bleed territory for most of the 3D
    printing companies but considering the fact that 3D printing is the
    future, it should not matter that much. Even I would invest in the
    possibility that there will be another sunset tomorrow. Its only about
    how much short term risk can you take.

    Disclosure: I am long OTCPK:AMAVF.

    Additional disclosure: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

    Tags: AMAVF, DDD, SSYS
    Jan 10 4:26 PM | Link | 4 Comments
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